Correlation Between KIMBALL ELECTRONICS and ORMAT TECHNOLOGIES

Can any of the company-specific risk be diversified away by investing in both KIMBALL ELECTRONICS and ORMAT TECHNOLOGIES at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining KIMBALL ELECTRONICS and ORMAT TECHNOLOGIES into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between KIMBALL ELECTRONICS and ORMAT TECHNOLOGIES, you can compare the effects of market volatilities on KIMBALL ELECTRONICS and ORMAT TECHNOLOGIES and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in KIMBALL ELECTRONICS with a short position of ORMAT TECHNOLOGIES. Check out your portfolio center. Please also check ongoing floating volatility patterns of KIMBALL ELECTRONICS and ORMAT TECHNOLOGIES.

Diversification Opportunities for KIMBALL ELECTRONICS and ORMAT TECHNOLOGIES

0.5

Correlation Coefficient

KIMBALL ELECTRONICS  ORMAT TECHNOLOGIES

Very weak diversification

The 3 months correlation between KIMBALL and ORMAT is 0.5. Overlapping area represents the amount of risk that can be diversified away by holding KIMBALL ELECTRONICS and ORMAT TECHNOLOGIES in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ORMAT TECHNOLOGIES and KIMBALL ELECTRONICS is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on KIMBALL ELECTRONICS are associated (or correlated) with ORMAT TECHNOLOGIES. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ORMAT TECHNOLOGIES has no effect on the direction of KIMBALL ELECTRONICS i.e., KIMBALL ELECTRONICS and ORMAT TECHNOLOGIES go up and down completely randomly.

Pair Corralation between KIMBALL ELECTRONICS and ORMAT TECHNOLOGIES

Assuming the 90 days horizon KIMBALL ELECTRONICS is expected to generate 1.47 times more return on investment than ORMAT TECHNOLOGIES. However, KIMBALL ELECTRONICS is 1.47 times more volatile than ORMAT TECHNOLOGIES. It trades about 0.0 of its potential returns per unit of risk. ORMAT TECHNOLOGIES is currently generating about -0.02 per unit of risk. If you would invest  2,160  in KIMBALL ELECTRONICS on October 10, 2024 and sell it today you would lose (390.00) from holding KIMBALL ELECTRONICS or give up 18.06% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Weak
Accuracy	100.0%
Values	Daily Returns

KIMBALL ELECTRONICS  vs.  ORMAT TECHNOLOGIES

KIMBALL ELECTRONICS

Risk-Adjusted Performance

6 of 100

Modest

Compared to the overall equity markets, risk-adjusted returns on investments in KIMBALL ELECTRONICS are ranked lower than 6 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, KIMBALL ELECTRONICS reported solid returns over the last few months and may actually be approaching a breakup point.

ORMAT TECHNOLOGIES

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days ORMAT TECHNOLOGIES has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of comparatively stable basic indicators, ORMAT TECHNOLOGIES is not utilizing all of its potentials. The current stock price uproar, may contribute to short-horizon losses for the private investors.

Pair Trading with KIMBALL ELECTRONICS and ORMAT TECHNOLOGIES

The main advantage of trading using opposite KIMBALL ELECTRONICS and ORMAT TECHNOLOGIES positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if KIMBALL ELECTRONICS position performs unexpectedly, ORMAT TECHNOLOGIES can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ORMAT TECHNOLOGIES will offset losses from the drop in ORMAT TECHNOLOGIES's long position.

The idea behind KIMBALL ELECTRONICS and ORMAT TECHNOLOGIES pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Money Flow Index module to determine momentum by analyzing Money Flow Index and other technical indicators.